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Expanding beyond the ‘small supplier’ category brings its own problems, but Flow Energy has prepared the ground.
On the back of a positive set of financial results, which saw revenue increase by £7 million to £40.4 million and the number of energy customer fuel accounts increase by 52 per cent, Flow Energy is on the up.
Managing director Andrew Beasley speaks to Utility Week and reflects on the year just gone, as well as looking forward to the future of the small energy company – including the rollout across the UK and Europe of its innovative micro-CHP boiler to domestic customers.
Q: The results show a 52 per cent growth in customer accounts at Flow. How happy are you with the company’s growth and what impact does this significant increase in customers have?
A: In terms of the energy business knocking on the door of 200,000 accounts – we’ll be there in two to three weeks’ time. This is a good pace of progress, especially when you think we were at 100,000 at the start of the year.
We are trying to maintain good customer service throughout that and it can be strained at times.
Customers’ onboarding is their first experience with you as a new supplier – the relationship can be strengthened or damaged at this point. We are conscious that even from our point of view at the small supplier end of the market, that concern of things going wrong has always been a barrier.
Q: With this rate of growth, you are likely to hit the current Eco threshold soon. How are you preparing for this, and its replacement?
A: This is something we plan for as it comes along really.
In terms of Eco, and its replacement, there have been some discussions, such as the development of a brokerage market for Eco compliance because this may be better.
We are supportive of a centralised brokerage system rather than it being down to us to build an Eco infrastructure and work it out ourselves. This will also prevent smaller suppliers being gazumped by larger suppliers.
If this model is adopted, a more structured and cost-effective mechanism will allow smaller suppliers to take part without having to introduce a large management overhead.
Q: What are your thoughts on the Competition and Markets Authority’s proposed energy market remedies?
A: I understand why the CMA needs to target sticky databases, and as a small supplier I would say ‘yes, great we want to have a go at these customers’.
A more balanced industry view is that we don’t want to set the industry up for another round of being seen as a pain and a nuisance. I can’t think of a better way, but there are dangers and we have to be careful. We need to make sure the industry doesn’t make itself any more unpopular.
Q: How is Flow preparing itself for the smart meter rollout?
A: We’re dipping toes a little bit to some extent, led by replacing legacy meters at the end of their lives. We don’t want to put in more old meters, so it is an opportunity to try that. As a small supplier we need to prepare to take on big six customers who are smart-enabled. For us, it is not so much putting in our own meters as it is about taking on pre-smarted customers.
We want to work quickly at go-live to take smart-enabled customers and take on smart tech. We have done some work to take on smart customers from another small supplier’s meters in the same way. It will be difficult with a wide portfolio of meters – and to build in interoperability. But our aim is to be ready and we are currently rolling out SMETS1 meters.
Q: And how is your own rollout going with your micro-CHP boilers?
A: We’ve started selling installations. But our plan is to grow relatively gently through this year. We want to make sure it goes out into homes in a controlled way and see the behaviour of the boilers in real life.
We have sent a number of units to overseas interested partners, including some to a co-operative group in Italy. There are some other players in Europe expressing an interest, particularly where they have same type of heating systems.
We are also looking at additional technologies. We see ourselves as a service provider, so we’re looking at other heating options. The micro-CHP works in certain instances, but they don’t work economically in a one-bed flat. We don’t want people ringing up and us have nothing to offer them, so we’re providing a range of solutions as well as cheap energy.
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